Corporate consulting attorney, what types of documents are drafted in M&A?

Hello. This is the corporate consulting attorney from Daeryun Law Firm (LLC). I see you asked about documents drafted during M&A.

M&A proceeds for several months or more through negotiations between various stakeholders, and various documents are drafted, so understanding the purpose and contents of these documents is necessary to facilitate smooth progress.

I will explain the representative documents drafted in M&A one by one.

▶ NDA (Non-Disclosure Agreement)

NDA simply put is an agreement entered into to prevent information leakage by setting the scope or timing of disclosure of business secrets or important information exchanged during the transaction.

▶ Teaser (company introduction materials), IM (Investment Memorandum)

Materials containing explanations about the company to be sold.

A Teaser provides a general introduction to the company without revealing the company name, while an IM is materials that organize the company name, characteristics, and situation in detail.

IM is usually provided after entering into an NDA.

▶ LOI (Letter of Intent)

A document where the buyer formally expresses to the seller their intention to purchase when they have intent to purchase.

It is used as a basic document to prepare for the negotiation stage by specifying acquisition conditions, prices, due diligence scope, etc.

▶ MOU (Memorandum of Understanding)

A document drafted with tentatively agreed contents before entering into the main contract.

Since it is not clearly distinguished from LOI, MOU drafting may be omitted if LOI was drafted.

▶ Term sheet (Contract Terms)

A document summarizing the basic items of contract conditions before the main contract.

▶ SPA (Stock Purchase Agreement)

The document corresponding to the main contract of M&A.

It includes major provisions such as stock purchase price, representations and warranties of seller and buyer, covenants, and damages.

▶ SHA (Shareholders' Agreement)

A document specifying the purchase agreement with shareholders who own equity in the company.

Contents on rights and obligations between shareholders such as purchase conditions, purchase price, and payment methods must be detailed.

Such M&A has various types of documents and complex contents, so they need to be more carefully prepared.

To prevent legal risks and pursue stable M&A, we recommend preparing with the assistance of a corporate consulting attorney.